ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation (ESIC) which is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India.
The ESI scheme was started for Indian workers. The workers are provided with a huge variety of medical, monetary and other benefits under the ESI Act from the contributions made by both the employer and employee towards the ESI scheme.
ESIC Registration Eligibility
Any non-seasonal factory or establishment having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 21,000/- has to mandatorily register itself with the ESIC within 15 days from the date of its applicability.
Under this scheme, the employer needs to contribute an amount of 3.25% of the total monthly salary payable to the employee whereas the employee needs to contribute only 0.75% of his monthly salary every month of the year. The only exemption to the employee in paying his contribution is whose salary is less than Rs. 176/- per day.
E.S.I.C. contribution rates are reduced W.E.F. 1st July 2019.
Entities Covered Under ESIC
As per the government notification, under Section 1(5) of the ESI Act the following entities are covered:
Restaurants or hotels engaged only in sales.
Road motor transport establishments.
Newspaper establishments (which is not covered under the Factory Act).
Private medical institutions.
Private educational institutions.
When the above-mentioned establishments employ 10 or more persons, the owner/employer of the establishment must compulsorily register it with the ESIC.
ESIC Registration Process Online
Earlier, there was manual registration. Now, the ESIC registration is completely online. Following are the steps involved in ESIC Registration:
Step 1: Log in to ESIC Portal
An employer needs to get himself registered on the ESIC portal.
An employer can register on the ESIC portal by clicking on the ‘Employer Login’ option on the home screen.
On the next page, click on the ‘Sign Up’ button.
After clicking on the ‘Sign up’ button, the employers need to fill in the details and submit the form.
Step 2: Confirmation Mail
After submitting the form for sign up to the portal, the employer will receive a confirmation mail sent to the registered mail id and mobile number entered at the time of sign up.
The email will contain the username and password details for registering as an employer and employee under the ESIC scheme.
Step 3: Employer Registration Form-1
Next, log in to the ESIC portal by clicking on the ‘Employer Login’ option on the home screen and entering the username and password received in the email. This will redirect to the page having the option of ‘New Employer Registration’.
Click on the ‘New Employer Registration’ option.
Next, select the ‘Type of Unit’ from the drop-down list and click on the ‘Submit’ button.
The ‘Employer Registration – Form 1’ will appear and the employer needs to fill in the details.
On the Employer Registration Form-1 (ESI Registration Form), the employer needs to enter the details pertaining to the unit of the employer, employer details, factory/establishment details and employee details. Once, the complete form is filled by the employer, he/she needs to click on the ‘Submit’ button.
Step 4: Payment for Registration
After submission of the ESI Registration Form, i.e. Form-1, the ‘Payment of Advance Contribution’ page will open where the employer needs to fill the amount to be paid and select the payment mode.
The employer will need to pay the advance contribution for 6 months.
Step 5: Registration Letter
On the successful payment of six months advance contribution, the system generated Registration Letter (C-11) is sent to the employer which will contain a 17 digit Registration Number by the ESIC department.
The Registration Letter (C-11) is a valid proof of registration of the employer.
The Registration Letter (C-11) is a valid proof of registration of the employer. The sample of the Registration Letter (C-11) is provided below.
Documents Required for ESIC Registration
Since the procedure for registration is online, no physical documents are required to be submitted. The documents required while filling the online registration form are:
Registration Certificate obtained either under the:
Factories Act, or
Shops and Establishment Act.
Certificate of incorporation of the establishment, which are as follows:
Certificate of Company Registration in case of a company.
Partnership deed in case of a partnership firm.
GST certificate of the establishment.
Memorandum of Association and Articles of Association of the company.
Address proof of the establishment. Any one of the following can be submitted as address proof:
Utility bills (Electricity bill, gas connection bill or telephone bill of the establishment not exceeding three months)
Rental agreement of the land on which the establishment is situated
Property tax receipts of the land on which the establishment is situated
A list of all the employees working in the establishment.
PAN Card of the business establishment as well as all the employees working in the establishment.
The compensation details of all the employees.
A cancelled cheque of the bank account of the company.
List of directors of the company.
List of the shareholders of the company.
A register containing the attendance of the employees.
Benefits of ESIC Registration
The benefits of registering under this scheme are varied. Some of them are:
Sickness benefits at the rate of 70% (in the form of salary), in case of any certified illness and which lasts for a maximum of 91 days in any year.
Medical benefits to an employee and his family members.
Maternity benefit to the women who are pregnant (paid leaves).
If the death of the employee happens while on work – 90% of the salary is given to his dependents in the form of a monthly payment after the death of the employee.
Same as above in case of disability of the employee.
Old age medical care expenses.
Compliances After ESIC Registration
The establishment needs to comply with the following after registering under the ESIC:
Maintaining the attendance register.
Maintaining a complete register of wages for workers.
Monthly return and challan within 15th of the succeeding month.
Maintaining a register that records any accidents that happened on the premises.
Returns To Be Filed After ESIC Registration
After the registration under the ESIC, the employers have to file ESI Returns half-yearly. The following documents are required for the filing of the returns:
Register of attendance of the employees.
Form 6 – Register.
Register of wages.
Register of any accidents which have happened on the premises of the business.
Monthly returns and challans.
Frequently Asked Questions
Is it mandatory for employers to register under the ESI?
Yes. All the employers who are covered under the ESI Act have to mandatory register themselves under the ESI scheme. The factories or establishments having more than 10 employees (in some states it is 20 employees) with a maximum salary of Rs. 21,000/- per month are covered under the ESI Act. They must register with the ESIC within 15 days from the time the organisation is covered under the ESI Act.
What is the penalty for not paying the contribution from the salary of an employee on time?
When an employer registered under the ESIC fails to pay the prescribed contribution towards the ESIC of an employee, the employer will be liable to pay simple interest at the rate of 12% per annum in respect of each day of delay or default in payment of contribution
Can a factory or establishment covered under the ESI Act go out of coverage if the number of persons employed goes below the minimum limit prescribed?
Once a factory or establishment is covered under the Act, it continues to be covered even when the number of persons or employees at any time falls below the required limit or there is a change in the manufacturing activity.
How to check ESI registration of an employee online?
An employee of a factory or establishment registered with the ESIC can check their ESI registration details with the insurance number issued to the employee at the time of ESIC registration. The employee must visit the ESIC website, click on the ‘Insured Person Login’ button and enter the user number and captcha code. The user number is the insurance number of the employee.
What is the ESI Code number?
The ESI code number is a unique 17-digit identification number allotted to every employee of a factory or establishment registered with the ESIC. The 17 digit number is generated using the ESIC portal after the employer has submitted their employee’s information.
How many employees are required for ESI registration?
ESI registration applies to all factories or entities that employ 10 or more persons who have a maximum salary of Rs. 21,000. However, in some states, it is 20 employees.
What is meant by insurance number?
To recognize each employee, the ESI scheme allots a unique identification number to every employee to recognise each employee. This number is called the insurance number and is used for obtaining benefits provided under the ESI scheme.
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